EPF interest not visible on statements due to software upgrade, FinMin clarifies

The finance ministry, in a late night tweet on October 5, clarified that EPF subscribers are receiving interest on their retirement savings and are not suffering any loss. The ministry issued this clarification in response to a tweet by TV Mohandas Pai, former CFO and ex-director of Infosys, who shared Moneycontrol's exclusive column on the microblogging site explaining how delay in crediting interest dents the retirement corpus of the subscribers.

"There is no loss of interest for any subscriber. The interest is being credited in the accounts of all EPF subscribers. However, that is not visible in the statements in view of a software upgrade being implemented by EPFO to account for change in the tax incidence," the finance ministry tweeted.

"For all outgoing subscribers seeking settlement and for subscribers seeking withdrawal, the payments are being done inclusive of the interest," it added.

Sharing Moneycontrol's column 'Dear EPFO, where is my interest?', Mohandas Pai urged the Prime Minister for much needed reforms to make the system more efficient.

There is no loss of interest for any subscriber.

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The interest is being credited in the accounts of all EPF subscribers. However, that is not visible in the statements in view of a software upgrade being implemented by EPFO to account for change in the tax incidence. (1/2) https://t.co/HoY0JtPjII — Ministry of Finance (@FinMinIndia) October 5, 2022

The columnist, a Senior Associate at Lee Kuan Yew School of Public Policy, argued that over the years there has been a persistently long lag between the time EPFO's Board of Trustees decides on the rate of interest for the financial year and the time the interest actually gets credited to the accounts of the members.

Sample this: If there is a delay in crediting interest by, say, four months every year, over a work career spanning 25 years, it implies that for 100 months the interest on balances was not earned, which reduces retirement income.

In recent years, the EPFO has made efforts to improve services to members. But a political decision is needed to transform it into a modern professional social security organisation, with greater powers and accountability, the columnist suggested.